World Bank sees rosy 2005 for China
By Song Quan (China Daily)
Updated: 2005-02-05 09:08
The nation's economy is expected to face an easier year in 2005 compared with the previous 12 months thanks to a favourable environment both internally and internationally, the World Bank said on Friday in its quarterly report about the economy.
The Chinese Government should take the opportunity to push forward with its much-needed economic reforms, the report suggests.
"Current trends suggest robust, sustained domestic demand growth... Income prospects suggest that the pace of private consumption growth can be sustained or even increased," said the report, prepared by the economics unit of the bank's mission in Beijing.
Investment, a key target of the Chinese Government's cooling-down measures in 2004, is expected to slow as a result of the lagging impact of the tightening.
But It is still projected to continue growing at a double-digit rate, the report said.
Moreover, "in contrast to a year ago, the absence of a need for drastic changes in the policy stance enhances predictability in the economic environment," it said.
Externally, the world economy and world trade are expected to grow briskly, which will benefit China's exporters.
International commodity prices have started to fall, which should moderate the country's import prices, it said.
The report welcomes the government's switch from "proactive" to "prudent" macroeconomic policies, noting that there were still risks of a return to higher investment levels because of the prevailing low real interest rates and incentives on local governments to pursue growth.
"Prudent monetary policies in our view means that the People's Bank of China should be prepared to raise interest rates again, if and when needed," said Bert Hofman, the bank's chief economist in Beijing. The central bank raised the interest rates, for the first time in almost a decade, in October.
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